India's Apparel, Home Textile Exporters Unfazed By US Tariff Threats

While Donald Trump's return as US President has cast a shadow of uncertainty over global trade, the domestic apparel and home textile industry remains largely unfazed despite his threat of reciprocal tariff.

Industry executives view his threat as a "bargaining tactic" rather than a serious warning. Although the lack of clarity in policy may cause a temporary blip in business sentiment, most exporters remain confident that major disruptions are improbable, as higher tariffs could significantly lead to increased costs for Americans—a situation that Trump may prefer to avoid.

"We don't foresee any major disruptions, as India's advantageous position makes any significant tariff increase by the US unlikely," said Rahul Mehta, chief mentor of the Clothing Manufacturers' Association of India, which represents around 20,000 manufacturers and exporters. "At most, we might see some symbolic increases on select products."

Trump has proposed to charge the same level of tariffs on goods coming into the US as others are charging on US exports. The US trade department is supposed to work out the details by April 1. India's tariff rates are higher, making them vulnerable to reciprocal tariffs. For instance, textile tariffs are the second highest among categories, with a weighted average rate of 24.7% on US imports versus 9.1% tariff rate imposed by the US.

Mehta, however, explained that higher tariffs by the US on Indian textiles would raise their production costs and ultimately lead to increased prices for Americans. "This could have significant social, economic, and political consequences. Additionally, relocating labor-intensive industries like apparel manufacturing to the US is not easy due to high labor costs, even with automation. While shifting sourcing to nearby countries like Mexico and Brazil may help, there are limits to how much can be relocated. These factors must be considered before introducing broad tariff increases."

"Trump's eye-to-eye tariff threat is more of a bargaining tactic to get what he wants from its trading partners on a broader level," a Tamil Nadu-based garment exporter said on condition of anonymity, citing business concerns. "Imposing higher tariffs on Indian garments would harm US more than good. And even if some manufacturing shifts to the US in line with Trump's 'America First' agenda, there is unlikely to be any short-term impact."

The US is the largest export destination for Indian textiles and apparel, comprising 28% of total exports valued at $36 billion in fiscal 2024. From April to October of the current fiscal, exports rose 7% year-on-year to $21.35 billion, largely driven by demand from the US and EU, which together represent 47% of exports. The US is also a key importer of home textiles, with companies such as Welspun Living Ltd., Indo Count Industries Ltd., Trident Ltd. and Gokaldas Exports Ltd having significant exposure.

"There is quite a bit of uncertainty around tariff, but I don't think things would change dramatically for India," said Samir Joshipura, chief executive officer, Trident Ltd. "We continue to see an upsurge on demand from the US."

"India, having the most robust supply chain globally in terms of cotton traceability, stable democracy and the vertical integrated plants, I think here stands to gain," Welspun Living Ltd.'s managing director, Dipali Goenka, told investors in a post-earnings call. "The relationship of India [and the US] is strong. So, we will wait and watch."

A shift in global sourcing away from China and the political unrest in Bangladesh, is benefitting India, with domestic companies gaining market share in US imports of apparel and home textiles.

From bedsheets to towels, Welspun Living has been gaining share in the US. The company has set up a new pillow factory in Ohio, U.S. in a bid to tap into the utility bedding segment. "This also complements the “Make in America” ambition of the new U.S. administration," Goenka said.

Home textiles manufacturer Indo Count has also acquired two companies in the US, with a combined production capacity of 13 million pillows annually, to expand its exposure in the utility bedding market. These acquisitions contributed Rs 100 crore to revenues in the October-December quarter.

Both Welspun and Indo Count's manufacturing presence in the US can shield them from any unforeseen tariff barriers to some extent.

Some players see likely trade tariffs by the Trump government as an opportunity, leading to greater trade between the two countries.

"While higher US tariffs may bring significant challenges, they also present an opportunity for India’s textile sector to innovate, focus on value-added products, and build stronger partnerships," according to Smita Joshi, vice-president, home textiles and exports, Nesterra — a brand from Sutlej Textiles and Industries Ltd., part of KK Birla Group. "Such changes call for open discussions to ensure balanced trade practices."